Buying and Selling A House At The Same Time
Based on a recent survey, one in four Americans plan to buy a house in 2017. This means that roughly 59 million Americans will enter the real estate market this year, many of which will be move up buyers. In contrast to first-time buyers, a move up buyer is an individual who purchases a larger house (or it can also be a more expensive house) than the one in which they currently live in.
IS IT TIME TO UPGRADE?
Your current house may have been a great starter home, but over time, the once beautiful, cozy, low maintenance house previously purchased becomes stuffy as your family begins to grow in size. Another possible reason to upgrade would be that your home is starting to show its age and the cost of upgrading it far exceeds the return and hassle. The one thing you have to consider is whether you have land to expand your home or you have the money to upgrade your home; an older home will always appreciate slower than a newer home.
PREPARING FOR THE MOVE-UP
The idea of a purchasing a home and selling your current home at the same time can be frightening, but armed with the right information and representation can make this dream a reality. Here are some move up tips:
- Know your current home’s value
You should at least know what you can sell your current home for in today’s market and also know how fast homes in your area are selling for.
- How much money are you going to make from your sale?
After you pay all the selling costs, how much money will you have available to purchase the new home? You can contact me for an estimated sales statement.
- Talk to a lender and get pre-approved.
There are loan limits in every county and knowing what you can get approved for in your county is a critical step in this process.
SOME COMMON MISCONCEPTIONS
Typically, in a normal scenario, you would first bid on a house you want, get a mortgage, and move in, then focus on selling your old house. Nowadays, this is not the case. You can actually do what is called a contingent sale. This means you can go find the house of your dreams, make an offer on a home ( assuming you were pre-approved), get your offer accepted, sell your home, rent it back, and transition into your new home. The beauty of this process is that you don’t have to worry about paying two mortgages and only have to move once! Of course, this process requires a lot of coordination and skill to make this a smooth experience.
To show how effective a contingent sale is, here is a client experience from a recent sale.
A little background. My clients were a mother and daughter each living in their own home. The mother lived by herself and the daughter lived with her husband and children. They approached me about the idea of selling both of their homes and buying one large home so they could live together. Now selling one home on a contingency already requires a lot of coordination and skill, but selling two homes on a contingency is not for the faint of heart!
In the process of selling their homes, we were able to secure investors that purchased their homes and allowed them to rent-back while their new home was being constructed. They not only sold their homes for over the list price but they were given favorable rental terms for renting back the home they sold. The benefit of doing so enabled them to stay in their home instead of having to move out, put their stuff in storage, and live in an apartment. Along with their cooperativeness and my support they were able to smoothly transition from their previous home to a new one.
Certainly, buying and selling a home at the same time is very stressful and not easy. But being properly armed with professional help and the right information, while carefully planning for the risks and hurdles, will mitigate the stress leading to a smooth transition. As they say, out with the old and in with the new!
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